THE ONTARIO BROKER APRIL 2014

APRIL APRIL2014 2014

JASON FAMME for W.B. WHITE INSURANCE & FINANCIAL

BROKERAGE OF THE YEAR

“THE SUCCESSION ISSUE”

02 ASSOCIATION NEWS 04 YBC UPDATE 06 CEO CORNER 08 SUCCESSION PLANNING 12 EDUCATION UPDATE 14 HR UPDATE 15 IBRI UPDATE 16 MEMBER BENEFITS 17 E&O CORNER 18 COMMUNITY VIEW

The official publication of the Insurance Brokers Association of Ontario (IBAO)

ASSOCIATION NEWS The Official Publication of the Insurance Brokers Association of Ontario (IBAO) Published by

Editor Angela Stelmakowich

Be the Best at What Matters Most

astelmakowich@canadianunderwriter.ca

416-510-6793 Senior Publisher Steve Wilson steve@canadianunderwriter.ca

416-510-6800 Associate Publisher Paul Aquino paul@canadianunderwriter.ca

Account Manager Michael Wells mike@canadianunderwriter.ca

Account Manager Christine Giovis christine@canadianunderwriter.ca

Account Manager Elliot Ford eford@canadianunderwriter.ca

Art Direction Sue Williamson The Ontario Broker is published monthly by Canadian Underwriter magazine (www.canadianunderwriter.ca).

Canadian Underwriter’s Insurance Group of publications is part of Business Information Group (www.businessinformationgroup.ca), a subsidiary of Glacier Media Inc., a leading Canadian information company with interests in daily and community newspapers and business-to-business information services.

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The articles that appear in this publication represent the opinions of the authors and do not represent or embody any official position of, or statement by, IBAO; nor do they attempt to set forth definitive action standards or to provide legal advice.

Insurance Brokers Association of Ontario 1 Eglinton Avenue East, Suite 700 Toronto, Ontario M4P 3A1 Tel: (416) 488-7422 Fax: (416) 488-7526 Toll Free: (800) 268-8845 (888) ASK-IBAO www.ibao.org Annual subscription is $52 + tax.

To order email: contact@ibao.on.ca For information on submitting an article, contact Ashley Hunking Marketing Coordinator ahunking@ibao.on.ca

02 April 2014 / THE ONTARIO BROKER

Lola Thake Director of Education IBAO

When I think of the word “succession,” I focus only on the root word... success!!

At IBAO, we are always thinking of your success by providing the tools, skills and confidence to help you be the best at what matters the most.

We are of the opinion that when it comes to succession, it is in the best interest of your business to leave behind the highest functioning operation, full of great people who are inspired by the culture of your office.

Let me explain. I just returned from an inspiring conference that focused on achieving business excellence, through leadership and education. I would like to share some “aha” moments I had during the conference.

Some of these tips, tricks and techniques may be refreshers for those who are part of IBAO’s Beyond Best in Class (BBiC) culture; for others, I hope these moments inspire

you to seek the transformational knowledge to help move your brokerage towards a “best in class” operation and culture.

At the conference, our keynote speaker and leadership workshop leader was John Spence, who has the unique ability to deliver critical business ideas in an engaging, straightforward and easy-to-apply manner.

Spence reads six to eight business books a week, summarizing key points from them and, ultimately, presenting them to people like you and me. Not if — but when — you attend IBAO Convention in October, consider yourself in for a real treat because he is our keynote speaker!

One key theme from his readings is to find patterns in anything and everything that we do. Understanding the patterns keeps us focused on the issues that consume the majority of our time, effort and execution rather than on the “one-offs.”

My first aha moment was when he identified a simple pattern of four foundations for building a successful business strategy. In line with his readings, the formula for business success is as follows: {Talent + Culture + Extreme Customer Focus} x Disciplined Executive = Success In this equation, brokers must determine what the value is that you provide to your customer. Here’s a hint: The quality of employees and the relationships they create with your customers is the only differentiation.

This may sound easy when you look at it in the aforementioned four pieces, but each one must also be broken down and executed as well.

My second aha moment was when John presented the opposite of success in the four “I”s that will guarantee a lack of success: r Ignorance: not paying attention to the patterns, trends, etc.; r Inflexibility: inability to get staff to change or move in the right direction; r Indifference: attitude of “not having to change” or that the status quo is acceptable; and r Inconsistency: changing everything all the time.

To avoid a lack of success, check out this simple competency model to foster a high-performance team: r Direction: vivid, clear, inspiring and shared; r Measurements: specific, observable and focused; r Competence: very good at what members do; r Communication: open, honest, courageous and transparent; r Mutual accountability: for all team members; and r Discipline: doing it every day.

I hope that in sharing these patterns for a successful business strategy, brokers continue to read and are inspired enough to undertake some internal reflection to consider what changes can be made for you to be the best at what matters the most.

Many hats Let’s change focus for a moment and consider business success from a leadership perspective.

When doing this, ask yourself what legacy you want to leave behind.

Hint: Consistently communicating that you are competent and that you care is a key pattern that John Spence has pulled from the many books he has reviewed.

Depending on the situation, leaders must wear four different hats. If your employee is highly competent, but needs motivation, you are a cheerleader; if your employee is highly motivated, but has a lower competence level, you become more of a teacher; if your employee is not motivated and not terribly competent, you take on a director role; and when you have an employee who is highly motivated and highly competent, you are a coach.

A teacher, director, cheerleader or coach — these are all hats that an effective leader must wear depending on the employee situation.

Effective, successful leaders must build organizations that assist employees in strengthening their competence, creativity and commitment. Leaders must create healthy environments where people are excited about their work, take pride in their accomplishments and contribute to their colleagues doing the same.

In short, their task is to encourage ideas, skills and energy.

What does all this information mean? And what relevance does it have for succession? Consider these hints below: r Ă OE UIF QBUUFSOT r EFĂ OF XIBU NBUUFST most to your business; and r CF UIF CFTU BU JU

IBAO offers tools to help with all of your succession planning needs: r BDDFTT UP QSPGFTTJPOBM HR services, such as job descriptions, internal policies, hiring support and an in-depth review of your human capital programs; r FEVDBUJPO QSPHSBNT to develop staff and management, including BBiC, Developing a Leadership Mindset, CAIB (to name just a few) and more, details of which can be found on our website at ibao.org/education; and r " Guide to Buying or

Selling a Brokerage.

Please contact me — Lola Thake, at lthake@ibao.on.ca or 416-488-7422, Ext. 112 — to discuss these offerings.

May 15 Independent Insurance Agents & Brokers of New York, Inc. Board Meeting May 20 Working Group Meeting May 28-29 Insurance Telematics Canada Conference

CEO’s Schedule: May 1-3 Insurance Brokers Association of Manitoba Conference

President’s Schedule:

May 3-7 Insurance Brokers Association of Alberta Conference

May 3-7 Insurance Brokers Association of Alberta Conference

May 9 Independent Broker Resources Inc. Board Meeting

May 13 YBC Team Leaders Meeting

May 13 YBC Team Leaders Meeting

May 1 North Bay Regional Meeting

May 29-30 Thunder Bay Regional Meeting

April 2014 / THE ONTARIO BROKER 03

YBC UPDATE Ryan Pursell Territory 3 Team Leader YBC

Come Together to Give Back YBC Territory 3’s 4th Annual Curling Bonspiel and the 10th Annual YBC Conference are two great events to put on your radar.

One of the most rewarding aspects of being a YBC team leader is the opportunity it affords to get out into the community — and give back to those in need.

March 7, 2014 marked the 4th Annual Curling Bonspiel, in which YBC

Territory 3 was successful in raising a little more than $5,200 for this remarkable charity. The bonspiel accommodates 112 curlers annually, with teams made up of players from insurance companies, brokerages, restoration companies, financial institutions, community groups and Hospice staff.

Territory 3 also received a significant amount of help from IBAO and the Barrie Simcoe Insurance Brokers Association, which took the opportunity to use our event as an affiliate day.

In the past four years, Territory 3 has raised over $16,000 for this commendable cause, which focuses on helping patients and their families transition through the final stages of life.

These donations are critical for the organization since its current level of funding is not sufficient to provide these much-needed services.

The success of our bonspiels could not be achieved without the immense

efforts of active YBC members in Territory 3. All dynamic individuals, these YBCers want to give back to their community and be recognized as a group of young professionals who can work together to make a difference.

Join in!

Many great things can happen when the right people come together and the YBC Conference is yet another excellent example of this.

Year after year, the conference brings together a new group of young professionals and allows them to network with insurance company CEOs, industry-related personnel and, of course, one another.

Still, the networking is not even the greatest part — attending the conference and actually learning something that you can bring back to your brokerage and use is what sets this event apart. Specifically geared to the ideas and appetites of young professionals, each attendee is guaranteed to find value in attending.

This year, I am especially looking forward to discussions on a number of key issues: telematics; the 15% auto reform; fraud rings; negotiation strategies; and digital marketing effectiveness.

There are also some new additions this year, including the following: a physical package of learnings for attendees to bring back to their offices; a speed-networking event; and circuitbased training sessions.

I hope that all young brokers will educate themselves on the benefits of being a YBC member, and make their way to the 10th Annual YBC Conference in Niagara Falls.

As insurance brokers, it is imperative for the channel that we maximize networking opportunities by presenting ourselves at community events and conferences. It is during these times that brokers are given the opportunity to come together and make a real difference.

For more information on the YBC Conference and new pricing bundles, visit ibao.org/ybc14

04 April 2014 / THE ONTARIO BROKER

© 2014 Royal & Sun Alliance Insurance Company of Canada. All rights reserved. RSA, RSA & Design and related words and logos are trademarks and the property of RSA Insurance Group plc, licensed for use by Royal & Sun Alliance Insurance Company of Canada. RSA is a trade name of Royal & Sun Alliance Insurance Company of Canada. ®™ Trademarks of AIR MILES International Trading B.V. used under license by LoyaltyOne, Co. and Roins Financial Services Limited. AIR MILES ® offer not available in Manitoba or Saskatchewan. Collectors can earn 1 AIR MILES reward mile for every $20 in premium (including taxes) to a maximum of 15 reward miles a month. All AIR MILES offers are subject to the Terms and Conditions of RSA, and may be changed or withdrawn without notice. For full details, please see Terms and Conditions available at rsabroker.ca/commercial/broker-tools/airmiles.

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Personal Insurance

Commercial Insurance

Global Specialty Lines

CEO CORNER Greg Somerville President and CEO Aviva Canada

with the needs and preferences of our customers, we risk becoming irrelevant.

Right people, with right capabilities, in right roles

Succession Planning — Creating an Ongoing Legacy One of Aviva’s core values is creating legacy. We want to be known for leaving things better than the way we found them. While many things contribute to creating legacy, to me, succession planning plays a key role.

It is a complex topic, but for the purposes of this piece, I will address succession planning under the theme of talent management.

Evolving along with customer needs Today’s customer wants to conduct business in many different ways — be it in person, regular mail, e-mail, online or social media. They want to engage in an honest and transparent way and on their own terms.

While I could focus this entire article on discussing the merits of the various vehicles, tactics and approaches, I think we can all agree that there is a need for us to continually adapt our business model. As we have witnessed numerous times in the past, businesses that fail to adapt certainly do not leave a lasting legacy.

We have to continually ask ourselves: What are we doing to meet the ever-evolving and future needs of our customers? What skills and capabilities do we need within our organization?

How do we develop or obtain these skills?

If we get it right, we will continue to add value and thrive; if we do not pay attention, if we do not evolve along 06 April 2014 / THE ONTARIO BROKER

Succession planning starts with attracting and developing the talent needed to build a high-performance organization, one with a strong future and that delivers results. At Aviva, we are putting more and more focus on making sure that we have the right people with the right capabilities in the right roles.

We are looking ahead to understand the critical skills needed for the future, to invest in growing the capabilities of our existing team and to actively seek out new talent.

We are valuing people who think and act differently. We are inviting challenge and fierce questions with the right intent — to create positive change within our business.

The world around us is evolving and we need to evolve with it. We need the players on our team to remain students of the business, to stay on top of our ever-changing landscape and continue to learn.

We have increased our internal training programs with a focus on talent development and growth, in addition to ongoing specific skills training.

We are recruiting across the country both within the industry, outside of it and at the university level.

Focus on collaboration All of this is with the aim of having forward-thinking, enthusiastic and well-equipped people who are able to evolve along with the needs of our customers.

I truly believe that creating this type of collaborative, challenging and engaging environment builds a legacy that will remain long after I trade in my smartphone and office for a set of golf clubs.

How you approach talent management in your brokerage is also a critical component in your succession plan.

Even if natural successors are present within your business, it is not as

easy as just handing over the keys to the kingdom.

Leaders must ensure that their successors have a balance of sales and management training, a strong industry knowledge base to continue to serve their customers’ changing needs, and a vibrant and rewarding environment for their employees.

Without talent management as a key component of succession planning, owners are often left with one option: selling their brokerage to a large insurer.

This can result in great uncertainty for the existing broker team, the departure of key staff, and significant change and the reduction of options for the customer base.

Buying out brokerages and converting them to a pseudo-direct model does not support a successful independent broker channel legacy. It reduces the critical quality advice, advocacy and choice model that brokers provide for Canadians. It leads to increased misunderstanding of insurance products and frustration for customers.

What Aviva does for brokers At Aviva Canada, we support broker succession through a loan program and strategic minority investments. We also offer a Business Executive Program, with a customized focus on Insurance Leadership Development, to key partners through York University’s Schulich School of Business.

The program centres on the essential principles of broker management — such as leadership, strategy, marketing, financial management and communications — and is a great development opportunity for those who are on the succession track.

By having a clear succession planning strategy — one that includes both evolving to meet customer needs and how we develop our team, we can continue to grow our business knowing the customers who have relied on us for years can continue to do so.

All of this will ensure the business we have worked hard to build will continue to thrive and create a legacy for future generations.

Crawford Risk Management Services

Customized Claims Management Programs for Risk Managers Crawford Risk Management Services (RMS) is dedicated to creating claims programs that meet the speciďŹ c needs of our commercial clients. Our team of dedicated and experienced account supervisors will effectively manage your program, providing a single point of contact and focusing on the details so you don’t have to.

Contact us at info@crawco.ca for more information on RMS or any of our services.

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SUCCESSION PLANNING Daphne McGuffin Program Director The BDO SuccessCare Program

Exiting the Business Highway As the owner and CEO of your insurance brokerage, your primary role is to move the business forward. While you may currently drive in the fast lane, covering as much distance as possible in the limited time available, it is clear you cannot stay there forever. At some point, you will run out of gas!

The exit ramp is typically on the opposite side of the highway, but it is dangerous to cross multiple lanes at the last minute. No doubt you have seen others try it only to cause some serious collisions — often involving their own family members.

Do not be one of the statistics, failing to plan ahead for the day that you hand over your keys of the company. Learn how to gradually move over to the exit ramp — one lane at a time.

Demographics indicate that 40% of today’s business owners will exit in just five years, while more than 70% will do so in the next 10 years. Others will undoubtedly experience an involuntary exit as a result of death, disability or some disagreement.

Safely changing lanes can take from five to 10 years, yet only 35% report that they have even begun to plan.

For a proactive approach to addressing the inevitable changes to the leadership and ownership of your brokerage, it is recommended that you invest in an integrated transition plan that provides choice around how and when the brokerage is sold, while still meeting the differing objectives of three key areas of life: r UIF Family/Personal area, which focuses on the well-being of individual family members, the family unit and 08 April 2014 / THE ONTARIO BROKER

other stakeholders, such as partners and employees; r UIF Ownership area, which centres on the preservation of the physical capital entrusted to next-generation shareholders or to the beneficiaries of your estate; r BOE UIF Business area, which is responsible for building and maintaining the wealth engine and running a competitive business that will attract prospective buyers.

Your business, your family and your community all benefit from a number of equally important intangible assets. Preserving and transitioning both the tangible and the intangible is the foundation of an integrated transition plan.

Integrated transition plan In essence, the Integrated Transition Plan involves preserving your lifestyle and family/personal relationships; managing and protecting your wealth and building the wealth engine and preparing the business for sale.

Over the years, a brokerage owner will have amassed much more than physical wealth. Your business, your family and your community all benefit from a number of equally important intangible assets. Preserving and transitioning both the tangible and the intangible is the foundation of an integrated transition plan.

As such, transitioning a brokerage involves much more than transferring the ownership. It is about ensuring that the firm is able to not only survive without the current leader, but has the ability to thrive under new leadership.

It is also about ensuring that your family remains connected, regardless of whether or not the baton will be passed on to one or more nextgeneration members or will be sold to a third party.

Key steps Before making any move, it is necessary to signal your intentions through good communication with key stakeholders, including next-generation management and family members. Good communication will help ensure everyone who is involved is not only moving in the same direction, but knows what to expect.

It is also critical to check all blind spots and prepare for all contingencies.

A broker owner needs to keep the focus on running a good business by monitoring the traffic conditions and anticipating the roadblocks. It is vital to be continually aware of possible bridge-outs in your marketplace while simultaneously looking for opportunities to diversify or take a new highway.

At the same time, you need to develop a plan to increase the value of your brokerage in the eyes of a buyer. This includes working on those elements of intellectual capital that are critical to a successful transfer of leadership: grooming a successor and transitioning the knowledge of operations and business relationships with customers, suppliers and lenders.

Finally, a brokerage owner needs to be in position well before that exit ramp appears. This demands having a plan that will preserve and protect your equity in the event of an involuntary exit.

Planning an exit and business transition is like managing any other project — except the outcome is critical to the future of many people. Success is dependent upon the right investment of time and resources to ensure you have easy access to the exit ramp when that fuel warning light comes on.

Refined With Time

Premier

We want to give a big thank you to our brokers – with your support, Premier has grown in to the robust company that we are today.

100 employees strong. 5 offices across North America. And now there’s more to Premier than Marine – with product lines that include:

* 5 2 8 3 2 ) & 2 0 3$ 1 , ( 6

9 , 1 7$*(

Cheers to the next 25 years.

Jason Famme knows a thing or two about the family business and the importance of strong roots.

So, too, does 85-year-old W.B. White Insurance, IBAO’s 2013 Brokerage of the Year. BY ANGELA STELMAKOWICH

CLOSE TO HOME There is an art to staying put while moving forward. That W.B. White Insurance and Financial Services has been within steps of where it first opened its doors in 1929 provides the canvas; the carefully applied strokes and colours only adds to producing the desired image over time.

Over the course of its 80-plus years in business, W.B. White Insurance has held true to what helped make the brokerage a success — strong roots, suggests Jason Famme, current vice president and great grandson of the founder of the brokerage that still bears his name.

“We’ve never been more than a block from where we’re currently located and we’ve been in the building that we’re in (a former dairy) since the ’50s,” Jason points out.

Founder W.B. White opened the

business in 1929, and was joined by his son (who served as president of IBAO) in the 1950s, followed by his grandson and then his great grandson, Jason, in 2003. Jason’s sister, who works as a CSR at the brokerage, fills out the current family tree.

“We are actually four true generations of family — no purchases, no amalgamations, no nothing,” Jason says of the brokerage, honoured last fall during IBAO’s Convention as the 2013 Brokerage of the Year. “That is a fantastic honour and that is 100% my staff. We have always been really lucky with the office that we had, very dedicated and loyal staff who will go above and beyond for the client and for the office,” he says.

That friendly approach is a reflection of the community that the brokerage serves. “As big as Oshawa is, it still has

a small-town feel,” Jason suggests.

“For us, the reputation that my great grandfather and grandfather have produced in the community, it lingers today. And being able to have a door where people can walk through, even though it’s being utilized less and less in today’s marketplace, I think there’s still a comfort with the clientele that we’ve been around so long,” he says.

That level of comfort was something that Jason tried to replicate even when he inherited either his father’s accounts or accounts from producers who had left. “I think there’s an instant comfort from the clients that they’re still dealing with not the same person, but the same family, and things are going to continue the same way.”

That apparent customer satisfaction seems clean when one considers W.B.

The Insurance Brokers Insurance Broker ™ Operated by the CG&B Group Inc. We are the Professional Liability Program Administrators for IBAO and IBAN

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10 April 2014 / THE ONTARIO BROKER

Photo: Patrick Thompson

White Insurance’s retention rate. This routinely tops 90%.

Growing, organically Despite putting a premium on comfort, that has not stopped the brokerage from developing and growing, albeit organically.

For example, W.B. White Insurance has a branch office in Lindsay, which opened in 2009. That office has experienced tremendous growth, with the staff complement increasing from two to four over just a one-year period.

With a farm specialist producer in the area, W.B. White Insurance found a building to suit the brokerage’s needs and then opened the branch office.

“It was time to expand and to move up, and it’s been a really good move,” Jason says. “It’s all been organic. There wasn’t a book of business that we purchased. We started absolutely from scratch,” he relays.

“To be able to have the clientele that we had up there provide them with a storefront so that they have that comfort that they can walk down the street and go in and speak to somebody was important to us as well,” Jason points out.

W.B. White Insurance’s new website is another area that is meant to help the brokerage meet its twin goals of growth and providing a positive customer experience. The site was built to ensure it offers users not only a more aesthetically pleasing layout, but also content to better reflect their needs and the brokerage brand.

“We’re always looking to broaden our reach; we’re always looking to grow,” Jason says. “But the most important thing to us is that if we do that it doesn’t affect our clients and our ability to service what we currently have,” he emphasizes.

“Our reputation in this community is 100% based on our service. You can grow and grow and grow, but if it’s growth to the detriment of your clientele, it’s not beneficial,” Jason says.

Smoothing transitions Change is also expected — and being prepared for — on the perpetuation front, never an easy thing.

“I think a purchase transition is easier in the end. Each party knows what it’s getting and how it’s going to work,” Jason says. But whatever demands and extra planning may be in play with

perpetuation in a family business, the effort is well worth it. “For a family business to be at the age that we are is quite amazing. Brokerages don’t make it usually past the second or third generation,” he says proudly.

“We’ve developed some staff internally that have been going up the ladder and been progressing really well and absorbing the knowledge of some of our 20-plus-years staffers,” says Jason, emphasizing the desire to attract quality people able to support the brokerage and its traditions.

“I don’t want staff who are going to be here for two or three years and move on. I really, truly want this to be a place where people will have their career and can grow and become part of, I guess, a family at work,” he says.

The brokerage was not Jason’s first job in insurance — “I did a broker program with Pilot Insurance where I was an underwriter for about a year,” he says — but it certainly could be his last.

Even back then, Jason had every intention of coming back to the family business. “I always knew, I think, that I would end up coming into the business,” he says. “It was something that I saw as a fantastic opportunity.”

April 2014 / THE ONTARIO BROKER

11

EDUCATION UPDATE Norah Black Marketing Coordinator IBAO

IBAO contacted BBiC attendee Johanna Allen, personal lines manager at Allen Insurance and affiliate president for the Hastings County Insurance Brokers Association — and asked her about her wanting to be a beyond best in class brokerage.

Why are you here at BBiC? We knew we needed to fix something. We weren’t sure what it was. We had been watching our sales team do really well and our account managers work really hard. But the growth we should have been experiencing wasn’t happening. We were still growing, but not by what we should be. So we decided to work smarter. And we needed help to figure out how. It’s exciting to be on the ground floor Beyond Best in Class is more than an IBAO education and think of what we can do to bring about innovation. In program: it is a roadmap to success; it is a doctorate one year’s time, we’ll be more digital in our solutions, we’ll in brokerage management; it is a vision of brokerage have better retention, we’ll be headed in the right direction utopia, a black belt in industry leadership; and it is — well on our way to where we want to be. It’s an evolution! the ignition that kick starts innovation.

Where do you see the brokerage in 25 years? Are we going to Brokers clear their mental clutter of the past and are given the be driving cars? Or are we going to be riding in them? The tools to become the best version of themselves — starting today. technology’s been developed. 25 years? Technology will have During BBiC, participants develop a blueprint for transforma- changed, but no matter what, we’re always going to have tional change, identify operational inefficiencies, create people. They’re still going to have feelings, they’re still going short- and long-term productivity goals, and learn to engage to have desires, have wants, have needs‌ and as much as their clients through every touch point with meaningful things change, it’s still people we have to look after, and take interactions. Human capital, internal process, brand care of. And that’s what we do. positioning and technology are all on the agenda.

We asked Johanna to share a few things she’s learned about succession planning along the way: r 5JNF *G ZPV DBO BMMPX GPS UJNF EP JU 5BLF UJNF UP QMBO and coordinate the transition. Allow for a transition of giving authority and assuming responsibility. Those who are watching the transition take place over time, may be more at peace seeing the process happen in front of them and are more likely to transition as well with confidence. r "EWJDF 5BML UP PUIFST HPJOH UISPVHI UIF TBNF USBOTJUJPO YOUNGS ALLIANCE PROGRAM Reach out to professional firms that have experience in areas where you may not be as strong. It is worth the investment for the future. Collaboration is something we don’t take advantage of as much as we should. r 7JTJPO BOE FYQFSJFODF 8JUI TVDDFTTJPO UIFSF JT VTVBMMZ B generational difference. Allow for the successor’s vision, but complement it with the current leader’s experience. Both parties have to be open to listening to each other and leaving their egos at the door. They have essentially the same goals of perpetuating, but the “howâ€? may be different. r 5FBN "MXBZT CF UIJOLJOH BCPVU ZPVS PXO TVDDFTTJPO BOE Keep your independence with the support of the success of the brokerage. Who will help the next generaone of ONTARIO’S LARGEST BROKERAGES tion move forward? Look at your own challenges and weaknesses, and how others can complement you and fill that y Independence to build your ďŹ rm void. You cannot be good at everything. Believe in what you y 20+ Insurance Companies available to are doing and share your belief and vision with your team. underwrite your accounts r 'JOBODJBM QMBOOJOH %P ZPVS SFTFBSDI FYQMPSF EJGGFSFOU y Personal Lines & Commercial Lines opportunities to finance the succession that doesn’t inhibit Marketing & Underwriting Support growth opportunities and strategies for the brokerage. y Administration & Human Resource Support Jump in with both feet and go. You will meet with resistance and bumps along the way, but keep moving forward.

Becoming BBiC

For more information call Gord Fergusson 905-979-1477 12 April 2014 / THE ONTARIO BROKER

Join us for our next BBiC sessions: May 6-8 and Nov, 18-20.

For details, call Tracey Blouin at 416-488-7422, Ext. 118

PROPERTY

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AUTO

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BUSINESS

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At Economical,® we’re committed to enhancing your business, from our robust product offerings and competitive pricing, to our excellent claims record and truly collaborative service. Whether it’s supporting you with new or existing clients, or hosting meaningful networking and training events, our team’s priority is making your business even better.

Visit us at economicalinsurance.com.

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HR UPDATE Tariq Bacchus Senior Associate ENGAGE HR

Succession for All… Including the Broker Principal Succession planning is often viewed as a process for the future.

However, the reality is that planning for succession benefits the business now. Just as business practices have evolved over the years, succession planning has also developed and transformed.

Succession planning is an essential part of doing business, and should be viewed as such — no matter how certain the future appears. It is easy to procrastinate when everything seems to be going well, but now is the most important time to take action and develop a plan.

Furthermore, safeguarding and maintaining the legacy of a successful business — in particular, a privately owned or family business — is essential to ensure a smooth transition upon divestiture and/or retirement.

Succession should no longer be a plan that can only be accessed when leadership is in the process of changing; a succession plan can (and should) be

initiated before it becomes a necessity.

When implemented successfully, the plan can be used to build and maintain strong leadership, help a business survive the daily challenges, and force executives to review and examine the current goals and strategic objectives of their brokerage.

Succession planning should bear a resemblance to any other business or strategic plan that brokerages undertake when identifying new customers or markets. Both processes require carefully thought-out plans, detailed analysis, a strong desire and commitment to implement, monitor and adapt, coupled with agreement from brokerage owners and key employees.

Effective succession planning at the broker principal level creates a stable and sustainable platform that helps to guide the business forward with a strong management team to guarantee management succession, as well as an ownership structure that removes any uncertainty about the strategic leadership of the business.

Moreover, the additional benefit associated with effective broker principal succession planning is the stability that it offers to investors, suppliers, vendors and customers.

As well, it preserves and protects one of the most critical and expensive assets of any business, its people, who possess a wealth of experience, knowledge and intellect.

Time to implement As a broker principal, now is the time to implement a strategy for replacing

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Employee succession planning involves understanding the brokerage’s long-term goals, identifying workforce developmental needs and making predictions based on workforce trends. valuable and experienced employees.

Employee succession planning involves understanding the brokerage’s long-term goals, identifying workforce developmental needs and making predictions based on workforce trends.

Succession planning, like any other business strategy, is a tool and a process, not a “fix-all.” An effective succession plan should not be considered an end; rather, its continued success requires that it be viewed as a beginning.

Map for success Think of a succession plan as a roadmap for success, and at the heart of any succession plan must be a focus on the long-term requirements of the business. It can also help businesses attract, engage, develop, motivate and retain successful employees.

At a broker principal level, when owners commit to creating and implementing an effective succession plan, embracing comprehensive strategies for transferring management and equity ownership, they can experience the rewards of creating lasting legacies for their business, while also ensuring successful business continuity.

Faced with an emergency situation, an effective succession plan can literally save the life of a brokerage.

To discuss succession planning for your brokerage, please contact Tariq Bacchus, Senior Associate at ENGAGE HR, a long-standing Affinity Partner. Also, consider taking advantage of your complementary, one-hour IBAO member benefit call to the ENGAGE Advantage Helpdesk at 905-306-8111, Ext. 240.

IBRI UPDATE Kevin Warren Vice President, Operations IBRI

Investing for Succession The future may be hard to predict, but need not be hard to prepare for. The insurance industry faces broad challenges: shifting demographics, the rising power of emerging markets and changing customer behaviour, all of which is helping to shape the marketplace’s long-term future.

Brokerages that anticipate and plan for change can create their own future.

Others, those “fast followers�, will need to be agile enough to recognize the leaders and adopt similar strategies.

The “survivors� are likely to be focused on short-term performance.

Which one are you?

What is clear is that in every business, there are winners and losers. In order to be among the winners today, insurance brokers must invest in their business, their people and work harder than ever to promote why their business is the first and best choice.

Brokers are well-aware of the looming changes, everything from purse-stringtightening by both businesses and consumers to ongoing government intervention in the auto insurance product that has put pressure on resources and low premiums that limit earnings on commission.

But there are brokerages out there that are still trending upward, continuing to win clients and grow their business and succeed in their community.

What’s their secret?

The key for those brokerages that are winning new business is commitment

Demographic shifts, the rise in the power of emerging markets cannot be ignored.

to investment. Finding the money for investment when a business is facing tough economic reality is not easy.

It would be flippant and unrealistic to suggest all firms can throw money at a difficult situation in the hope of resolving it. However, if a brokerage has some cash to spare, it should look at investing in one crucial area: talent.

Have you got talent?

Through Independent Broker Resources Inc. (IBRI), myinsurancejobs.ca was created as a niche job board to provide a solid career pipeline for today’s top talent. As an employer, relevancy in the marketplace will deliver the growth job-seekers and new client business alike will bring to your brokerage.

Demographic shifts and the rise in the power of emerging markets cannot be ignored any longer! Let myinsurancejobs.ca be the affordable medium to attract the right office dynamic for your

In order to be among the winners today, insurance brokers must invest in their business, their people and work harder than ever to promote why their business is the ďŹ rst and best choice. business. A commitment to investment at a time when it makes sense to pull back will cost you opportunities for growth and retention.

7JTJU NZJOTVSBODFKPCT DB GPS B GVMM listing of insurance jobs from across the country. For more information about myinsurancejobs.ca or any IBRI service, contact Kevin Warren at 416-488-7422 or kwarren@ibri.ca.

TM

Join WICC Ontario at Relay For Life What: Canadian Cancer Society’s Relay For Life – the largest WICC fundraising event in Ontario.

Why: To celebrate cancer survivors, commemorate those we’ve lost, and raise money for life-saving research. Our goal this year is $421,000!

Where: Esther Shiner Stadium in North York, and other locations around Ontario.

When: Friday nights in June. North York event is June 20, from 6 pm.

Register your team: go to www.relayforlife.ca, remember to Pick WICC under ‘Team Company’ to have 100% of your funds go to cancer research.

Questions? Go to www.wicc.ca

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April 2014 / THE ONTARIO BROKER

15

MEMBER BENEFITS Tony Ngo Manager of Industry Programs BMO Bank of Montreal

If the current brokerage value is not enough, advisors can then explore strategies for building up personal assets in advance, as well as methods to enhance the brokerage’s value prior to a future sale.

Realizing the value

Passing the Torch All too often, succession planning is a step that principals put off because of the more immediate concern of running the brokerage.

There is no argument that keeping up with operations, customer needs and markets is a full-time job in itself.

However, it is important to find the time to develop and implement a succession plan.

In not planning, a broker actually may increase operational risk, reduce sale options and, ultimately, limit the value you get for your life’s work.

Getting started There is little doubt that getting started with succession planning is the hardest part. Some see the task as overwhelming and time-intensive, but a broker can ignite the process by thinking through three key questions: 1) What is important to me and my brokerage?

2) How much do I need to retire?

3) When is a preferred time to leave?

With answers to these questions, your advisors can fill in the succession plan details with greater ease.

One of the critical steps in this regard is getting the assistance of advisors to determine how much the brokerage is worth and how this fits with your specific retirement needs and timing.

A successful succession plan is one that allows you to gradually make the transition out of a business management role, while still maximizing your personal financial security.

16 April 2014 / THE ONTARIO BROKER

Once a broker has determined a value, he or she can then develop a strategy for tapping into it. A successful succession plan is one that allows you to gradually make the transition out of a business management role, while still maximizing your personal financial security.

There are several routes available.

A broker can sell the brokerage and invest the proceeds elsewhere, or sell a portion of your interest to achieve a greater diversification and better protect the value of your assets. If retirement is many years away, some wealth can be unlocked without having to sell at all.

In either case, it is important to understand all the financial benefits that you may currently be receiving by being an owner-operator. When adding up all of the financial benefits being derived from the brokerage — for example, auto expenses, income splitting, medical benefits and salary — the actual total might surprise you.

Upon the full sale of a brokerage, many of these benefits will likely go away and you will be reliant on an investment income stream from the sale proceeds. Keeping in mind the current low interest rate environment, any investment income will likely be far less than your current financial benefits.

While the risks of operating a brokerage differ from holding an investment portfolio, carefully considering the potential for generating greater financial benefits through a graduated or delayed sale versus an immediate sale at what appears to be a high price is a worthwhile exercise.

It is important to understand all the financial benefits that you may currently be receiving by being an owner-operator.

When adding up all of the financial benefits being derived from the brokerage — for example, auto expenses, income splitting, medical benefits and salary — the actual total might surprise you. duties and responsibilities to key employees at the right time can reduce this dependency and potentially create internal successors.

At a minimum, this reduced dependency can make the brokerage more attractive to buyers (and their lenders) who recognize the inherently lower ownership transition risk.

Sufficiently transferring responsibilities also serves as a bit of an insurance policy. In the event of a principal’s incapacitation or demise, employees would be well-suited to continue to run the brokerage and preserve its value until a suitable buyer is found (or they purchase the business themselves).

While doing nothing for succession planning is an option, developing a good succession plan puts a broker much more in control and creates stability. Knowing that you have a well-managed brokerage that is not overly reliant on any one individual for its success can offer greater latitude as to who and when you sell.

Employees and markets alike can take comfort (and likely value) knowing the direction in which the brokerage is headed, family members know how they may fit into plans and, ultimately, it can provide principals and their families with greater financial security.

Who will take over?

Often, a brokerage is heavily reliant on the principal(s) for its ongoing operation. Transferring appropriate

Contact Tony Ngo for all your business’ financial needs and planning at tony.ngo@bmo.com, or 416-927-5348.

E&O CORNER Hugh Fardy Senior Vice President The CG&B Group

Putting Success in Succession Planning It is imperative that in the transaction of buying or selling a book of business — or for that matter, a firm — consideration be given to how one protects errors and omissions (E&O) exposure.

This consideration must be included right from the start of the transaction and should never be an afterthought, dealt with later. In fact, this subject should even form a part of the negotiation. It is important, regardless of the side of the transaction, that you understand clearly who and what you are looking to protect.

Your E&O insurance is written on a claims made form, the policy in force at the time the claim is made is the one to respond to. It must be

properly structured to address your situation and protect your interests.

In every case, the vendor must be sure to have protection in the future should it be named in a claim for something done prior to the actual sale.

Depending on the sale situation, you will want to explore options such as a continuing E&O policy for the ongoing firm. That policy should respond to any claims made in regard to acts in the past, including those relating to accounts you no longer have.

With a firm winding up an extended discovery period, protection should be provided should you be named in a suit post wind-up of the firm.

In a situation where the entity is sold along with the book of business, being added to the buyer’s E&O policy can prove valuable.

The buyer must be sure it will be protected should it be named in a suit for acts after it has acquired the account(s) and possibly prior to. Once the buyer takes possession of an account(s), it will generally be held responsible for the insurance in place, subject to a reasonable time to review.

So while an act of the previous broker, prior to the sale, may be the issue, it does not mean you cannot and will not be named as the current responsible broker.

Acquisition considerations Any time you are looking at acquiring a business, the buyer should consider including some protective conditions in the terms of engagement. Perhaps, this may extend as far as putting the vendor (and even the clients) on notice of the review period before which you, the buyer, will accept responsibility.

There are many variables when it comes to these transactions and as many tools with which to work in protecting your E&O exposures.

Appropriate use of prior acts coverage/ exclusions and retroactive dates are an important piece of the process.

Each party must be aware of individual responsibilities and when these apply. Addressing this early on in the negotiation and building it into the transaction will give you the advantage in obtaining the proper protection.

Keep your broker and insurer well-informed and seek their advice. It is always easier to do things properly ahead of time than it is after the fact.

The IBAO has an excellent guide for the purchase or sales process of a brokerage on its website and should be reviewed before beginning any such activity. The Guide to Purchasing or Selling a Brokerage is available at ibao.org/publications.

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COMMUNITY VIEW

GAME ON

BOWLED OVER

On January 24, The Cowan Foundation donated $250,000 to the Brantford & Area Sports Hall of Recognition, with the cheque presentation taking place at the Wayne Gretzky Sports Centre in Brantford, Ontario. Members of the Brantford Church Hockey League took part in the event, which occurred in advance of a puck drop ceremony to open the league’s annual tournament. “Donating $250,000 to this outstanding facility aligns with our foundation’s goals focused on youth, health and wellness, while at the same time provides an opportunity to contribute to a project that matters to local residents, organizations and businesses,” says Bob Herron, branch manager of Cowan Insurance Group’s Brantford Office.

Territory 11 YBCers, along with several company people, got together for the 2nd annual Charity Bowling Night in Oshawa, Ontario. Organized by Greg Kruk (pictured above), Territory 11 Team Leader.

Proceeds from the event went to Grandview Kids charity, an initiative that provides special needs children in the Durham region with access to the support they deserve.

Left to right: (back row) Ron Finucan, fundraising chair for the Brantford & Area Sports Hall of Recognition; Sandy Jackson, director of recreation for the City of Brantford; Kim Warren-Skinner, administrative assistant for the City of Brantford; Sir Walter Gretzky; Brantford Mayor Chris Friel; Bob Herron, branch manager of Cowan Insurance Group’s Brantford Office; Steve Smith, regional account manager of Frank Cowan Company; and Mike Woodburn, chair of the Brantford & Area Sports Hall of Recognition.

18 April 2014 / THE ONTARIO BROKER

Left to right: Andrea, Grandview Kids Ambassador mom; Owen, our Grandview Kids Ambassador; Mia, Owen’s sister; Annette, Grandview Kids Ambassador mom; Greg, Territory 11 Team Leader; Myke, Grandview Kids Ambassador dad; Tara, Grandview Kids occupational therapist; Brigitte; and Andrew, Grandview Kids Ambassador.

Protecting happiness From classic cars to seasonal retreats, we make it simple for you to protect the things your customers love with our leisure and lifestyle insurance. We’d like to thank you – our broker partners – for helping us protect Canadian fun with best in class coverage, service and support for 60 years.

Speak to your Account Executive to learn more about why recommending Aviva is the right choice for your customers.

AvivaPartner.ca Home | Auto | Leisure & Lifestyle | Business | Group | Surety *Aviva and the Aviva logo are trademarks used under license by the licensor.

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